City rejects a new proposal for Pulaski Incinerator

The city has rejected a proposal by the operators of the Pulaski Incinerator to alter their contract for disposing of Baltimore's trash.

The offer to amend the deal was turned aside because it would cost the city even more than its current agreement with the Pulaski Co., according to a letter written yesterday by Public Works Director George G. Balog.

The department has decided "that it would be of no financial benefit to the city to accept your proposal," Balog wrote.

Balog refused to comment on his letter, saying that the city was still in negotiations over the terms of the incinerator deal with Willard Hackerman, general partner of the Pulaski Co.

While Balog refused to comment, a source said the city is considering several ways to get out of the Pulaski deal, which is draining the city's coffers at the rate of $14 million a year.

Among the options are:

* Condemning the incinerator, an unlikely choice since the city would have to pay Hackerman for the facility's value.

* Urging Hackerman to allow the Baltimore Resource Energy Systems Co. [BRESCO] firm to operate a trash-to-energy plant at the site or to join in the firm's efforts to build a similar plant in Anne Arundel County. The source said Hackerman could make money by selling its trash disposal contracts to the firm and by having his Whiting-Turner Contracting Co. build the plant. The firm built the BRESCO plant on Russell Street.

* Buying out the agreement with Hackerman when the first option comes up in 1996. That is also considered unlikely because of the high cost.

* Suing Hackerman in an effort to get out of the current contract. That also is considered unlikely because of the slim chance for victory, the source said.

Balog's letter was addressed to Hackerman, the politically well-connected construction magnate who bought the incinerator from the city in 1981 for $41 million.

The sale, consummated during the administration of Mayor William Donald Schaefer, was widely attacked as a "sweetheart" deal between the then-mayor and Hackerman, one of Schaefer's most loyal political fund-raisers and civic trouble-shooters.

As part of the sale agreement, the city agreed to pay all of the incinerator's capital and operating costs and provide 174,000 tons of trash a year to be burned at the incinerator.

It has proven to be a "very bad deal for Baltimore City," Mayor Kurt L. Schmoke has said. The city estimates that it costs $166 a ton to dispose of trash at Pulaski -- three times the cost of burning trash at other incinerators.

Balog's letter said the deal would be worse for the city under Hackerman's new proposal, which was made last October after city officials released a consultant's report criticizing the Pulaski deal.

Hackerman had said in a letter to the city that in return for assuming the incinerator's operating and repair costs, he wanted:

* The city to take over the facility's debt payments.

* Free city water and sewer services.

* Free disposal of incinerator ash.

* Free use of city landfills for disposing of 300 tons of trash when the incinerator is out of service, which city officials said occurs about 30 percent of the time.

* A 50-year extension of the company's land lease at the incinerator.

* City support for any future expansions of the incinerator.

* City support in opposing requirements that the incinerator purchase scrubbers at the plant. The city would pay 85 percent of the cost for the air pollution control devices, under the proposal.

Balog's letter said that under Hackerman's proposal, it would cost the city $16.6 million to send trash to the incinerator. In fiscal 1989, the city spent $14 million in connection with the plant.